PUC – Public Finance Disaster

The Government took
over R911 million
rupees of debt from the
Public Utilities Corporation
when the management was
handed over to a French
management team last year.
But even today. PUC has
accumulated losses of R619
million on its books. These
huge losses are revealed in
the Auditors Report on the
accounts of the corporation
for 2009, which has been
given to the National
Assembly.

What the Seychellois
public would like to know is
how a publicly owned company
got into this state. It is
impossible to accept that such
losses were incurred simply
on the provision of electricity
and water.

The answer is perhaps
not hard to figure out because
it reflects the situation that the
Government itself was, and
continues to be, in. It only
represents the total failure of
responsibility on the part of
those who were managing
public finances.

Foreign obligations represent
the largest share
(SR875 million) of the debts
taken over by the
Government. These are not
part of any debt write-off or
re-scheduling. The
Seychellois public will have
to face high utility rates for
years to pay them off.

As examples of the disastrous
management, the
accounts show that R56.8
million of desalination equipment
no longer functional
was written off in 2009 as
well as R25 million of obsolete
strategic spares. That’s
R81 million down the drain
on this item alone. It is another
proof that the purchase of
desalination plants may have
been riddled with corruption.

Decisions which have
cost PUC enormously
include the arrangement to
pre-sell electricity to the
Indian Ocean Tuna factory,
which became a huge loss
when fuel costs increased and
the rupee was devalued.

PUC is far from financial
stability today, even after the
transfer of the company to
French management.

In a special note in their
report, the Auditors have
expressed concern over the
prepayment of R63 million to
overseas suppliers noted in
the 2008 accounts. In 2009,
R13 million of this was written
off “with no satisfactory
explanation given”, the
Auditors say.

The Corporation’s net
comprehensive income for
the year was R6 million but
that is without any payments
of debts and not even the cost
of the management consultancy
contract of 6.1 million
euros (R75 million) which is
being met by the
Government.